By Mark Huffman

Every year 12 million U.S. consumers take out a short-term payday loan. Most are faced with a financial emergency and plan to repay the money quickly. Most, however, quickly discover they can't.

"I fell on hard times and decided to take out a small payday loan," Tareeka, of Jackson, Miss., wrote in a ConsumerAffairs post. "The company loaned me $600.00. I already made a payment of $486.00 so far and still owe $812 and only borrowed $600. This is paying more then double back."

Tareeka's story is far from unusual. A new report from The Pew Charitable Trusts found the average payday loan requires a repayment of more than $400 two weeks later. The average borrower, the report says, can only afford to pay $50.
The question never asked

If borrowers stopped to think, they might see the trap. If they are short of money now -- requiring them to borrow -- how are they going to be able to pay the money back, plus fees, in just two weeks?

But when people are in desperate straits, they often don't think ahead. When two weeks go by and they are unable to repay the loan, they have no choice but to borrow more money, starting the cycle all over again.
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This kind of lending used to be illegal.